I’m often asked, how is it possible to become financially free (or retire) at such a young age?
Well, there are many challenges but the first one is to accumulate enough money for all of our financial needs.
Once we’re determined to make it happen, we need to work on different aspects of the game.
It is something like “Cracking the Code”
Let me share what I did to achieve Financial Freedom in such a short span of time.
I recognized an opportunity “Investing in Indian Real Estate” at the right time. The year was 2003 when I made my first investment in Gurgaon (one of the IT and BPO/KPO hubs).
I had spent last few years at Merrill Lynch and had an opportunity to work with some key people that were responsible for calling the shots. Working with top management helps one to get a good insight on the corporate strategy and its impact on the organization and its people.
When I joined in early 2000, ML had record earnings and profits. The money was everywhere. But when I left in late 2002, things were worse. Who knew it was the beginning of Great Decline!! They had started evaluating and experimenting with Indian IT vendors. Such things weren’t expected at Merrill Lynch, the number one US brokerage firm. It convinced me that the Y2K opportunity was nothing in comparison to what was yet to unfold.
The IT and BPO revolution was the trigger that would change India dramatically. The key change that many (including myself) benefited from, was the transformation of middle class and the real estate industry in India. With each visit, I gained more awareness, confidence and experience. It was like being at Ground Zero every time.
The initial goal was to own 4-5 apts in key cities that would provide enough passive income for the maintenance and long term expenses. This seemed achievable in 6-8 years of timeframe. There were many risks with this approach but all were well thought out, planned and calculated.
I’m listing other factors and strategies that helped us achieve this goal:
Dual income: Of course, the family takes priority once you have children. But even a little income from part job or business helps. It gives moral boost to the bread earner of the family to take some risk in career and in investing which is very important for becoming successful.
Own a business instead of being a fulltime employee: If at all possible, try to incorporate business and route earnings through it. This way you will end up with more money in your pocket.
Move to a cheaper location: It is surprising (and still holds true) that quiet a few places offer much better weather, lifestyle, housing and education at half the cost of what you would pay in the main hubs of the country. For example, you can easily get a nice luxury home in 300-400K in Atlanta suburbs that you won’t get, even if you pay a million in the Northeast or California.
Max out your Retirement accounts: Not only will this save you on your taxes but also set you up for Forced Savings (great technique for early retirement). The Less money in your wallet means less indulgence.
Timing is the key: It is never too late to start planning but there’s nothing like getting an early start. It is extremely important in Investing, you have to let the Compounding work for you. Otherwise we will end up paying a heavy price for the lost time.
Get the most out of your job while you’re single or without kids. I tell my friends in their twenties to use the flexibility of moving (and no strings) to their advantage.
Soaking Fully in Goal objectives and the journey: You have to live and breath the Freedom, well before you achieve it. I loved soaking myself in the journey and the beauty of Freedom. Just Feel and Imagine!! Having No Boss, not having to drag yourself to work everyday and dealing with the Lifeless conversation of Cubical Nation. We have to surround ourselves with positive people (and the material) who are ahead of ourselves or have the same goal.
Seek help: There are tons of books and resources on the net. The inspiration and guidance can come from any source and in any form!!
I followed all of the above guidelines but couldn’t follow an important one below:
Be Frugal: I was very bad at this and still am..to some extent. My thinking was to spend as much as possible so that I have to look constantly for ways to earn more.. This strategy is ok in good times but disastrous in bad.
Being Frugal can really speed up things as it impacts pretty much every decision in our lives. I know many people who are Financially free, due to this quality alone i.e. they have downsized and reduced material needs over the years. They would rather spend more time with their families and pursuing their hobbies instead of keeping up with the Joneses.
Though the Indian Real Estate opportunity might not be the same as it was eight years ago but there are still good opportunities in India, US and around the world. For example, there are many businesses that are currently available at a big discount in India and the US. Another suggestion: Think of buying raw land in India. Whatever has happened in India so far is only Tip of the Iceberg, Real growth and transformation is yet to come!!
In the US, currently real estate is so cheap. You can buy quality homes in good cities at a fraction of their peak values. Think of building a quality real estate portfolio that can provide you with enough cash flow in good and bad times. There’s also icing on the cake i.e. the money has never been this cheap. You can borrow practically at No Cost as I mentioned in this post.
The bottom line is: there are enough opportunities right now if you’re really serious about retiring early or making sure that the financial needs of your family are well taken care of.